Legion briefed on schools investigation

The American Legion

Jul 18, 2011Jul 18, 2011

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Three American Legion national staff members sat in on a July 13 briefing conducted by Sen. Tom Harkin of Iowa and his staff regarding a year-long investigation of for-profit schools and whether they are a sound educational choice for veterans using their Post-9/11 GI Bill benefits.

Attending the briefing were two assistant directors of the Legion's Economic Division, Bob Madden and Steve Gonzalez, and Jeff Steele, assistant director of the Legislative Division. The investigation was conducted by the Senate Health, Education, Labor and Pensions (HELP) Committee, chaired by Harkin.

During its investigation, the HELP Committee discovered that GI Bill benefits do not count as federal financial aid, bypassing the nationwide requirement that for-profit colleges receive no more than 90 percent of their revenue from federal sources. As a result, according to the investigation, many large for-profit companies have invested heavily in recruiting efforts that target veterans, servicemembers, and their families.

For example, while Bridgepoint Education, Inc., has only one employee for its placement staff to help graduates find jobs, it has hired more than 1,700 recruiters. "Our military enrollment grew from one percent in 2007 to 17 percent at the end of September 2009," said one Bridgepoint executive interviewed by Harkin's staff.

Another executive of Kaplan Higher Education told Senate investigators that during a brainstorming session, the number one item on the list of initiatives to deal with Kaplan's 90/10 situation was "to accelerate military billings/collection. Go to D.C. and pick up the check if you have to."

Additional key findings of the HELP Committee's investigation of 30 for-profit schools include:

• A large part of revenue is not spent on faculty/administration salaries and other educational expenses. At ITT Educational Services, 19 percent of its revenue went to marketing and 37 percent to profits in 2009.• Substantially more DoD education dollars are being taken in: combined DoD and VA education benefits received by 20 for-profit schools increased from $66.6 million in 2006 to a projected $521.2 million in 2010.• Tuition and other fees are much more expensive. For example, earning a bachelor's degree in business costs more than $70,000 at the for-profit Westwood College and $41,000 at the University of Colorado. While Indiana University charges about $40,000 for such a degree, the for-profit ITT Tech collects just under $89,000.• Student withdrawal rates are high. At Kaplan Higher Education, 68 percent of its students withdrew from bachelor's degree programs from July 2008 to June 2009. During this time, Kaplan collected more than $17 million in GI Bill benefits.• Of the five for-profits receiving the most GI Bill funding in 2009-2010, four of them have student loan repayment rates of only 31 to 37 percent.

In its executive summary, the HELP Committee's December 2010 investigation report states, "The expansion of military benefits have made servicemembers, veterans, spouses and family members highly attractive prospects to for-profit schools seeking to rapidly increase enrollments to satisfy the demands of investors."

Addressing the value of education at for-profit schools for those using their GI Bill benefits, the report noted, "Given the troubling short-term outcomes of many of the for-profit schools examined by the Committee, and the unknown, but potentially troubling prospects for students completing these programs, very serious questions exist as to whether our servicemembers and veterans are receiving the education intended by Congress."

The HELP Committee's full report, "Benefitting Whom? For-Profit Education Companies and the Growth of Military Educational Benefits," is available online.